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How can brands make the most of the subscription economy?

Nov 14, 2017

Posted by Becky

The purchase of goods and services has been conducted for centuries, even before the dawn of modern monetary systems. Yet in more recent times, subscriptions have proven to be a popular model for a variety of services from DVD rental to wine delivery. This subscription model has taken a new turn with digitalisation, allowing organisations large and small to offer subscription services as an alternative model to traditional retail, regardless of their product offering.

Although many marketers are inclined to dismiss this form of consumerism as only viable in certain markets and for certain brands, this is in fact not the case. The subscription economy is booming, and brands from across sectors can learn from those who have made success stories of this opportunity.

Lush drives loyalty

Cosmetic store Lush, well-known for its ethical approach to creating and testing its products both in regard to animal testing and reducing its impact on the environment, is pioneering the way forward for subscription services as a way to boost customer loyalty.

Marketing Week recently reported that Lush has experienced a boom in popularity of late, recording ‘a 75% jump in pre-tax profit to £43.2m 2016 as sales rose 26% to £723.2m.’ Such impressive figures can be accounted for due to recent forays into the North American market, strong customer service and the way that millennials and socially-conscious consumers have bought into the ethos of the brand.

On the back of this success, Lush has begun to branch out into offering a subscription service aimed to build on its community brand values and desire to be the first choice of cosmetic for younger generations. The subscription is ‘customisable and allows customers to choose which products they would like and how frequently they would like to receive them,’ according to The Independent.

Lush’s Chief Digital Officer Jack Constantine told Marketing Week ‘we don’t necessarily believe generating loyalty is purely about offering discounts so we want to build more subscription services and fan clubs,’ creating a ‘seamless overlap’ between the in-store and digital experience and ensuring that the brand can offer its consumers instant benefits when they need them most.

Sell a Spotify experience

One of the biggest winners from the subscription model has been music service providers. To think that only ten years ago there were two legal models for finding the latest music: buying the CD or pay-per-download services like iTunes, sounds somewhat ridiculous given the exponential rise in the use of music subscription services.

The likes of Spotify, Apple Music, Amazon Music and Google Music have completely transformed the music industry, as monthly subscriptions that allow unlimited listening have become virtually the norm for a whole generation of consumers. A large part of this success comes down to the fact that this model allows brands to sell an experience, built on the back of a relationship with the consumer and high levels of personalisation.

For Forbes contributor Kimberly Whitler, focusing on this experience is essential if brands are to succeed with the subscription model. She argues that unlike the traditional purchasing experience in which as a consumer ‘I hear about a product, maybe I check it out in a store, then I buy it. End of transaction. End of story,’ for subscribers ‘it’s a relationship - it takes place over time. It’s not static, it’s fluid.’ Whitler concludes that the secret to your brands success in this arena is knowing that ‘as a subscription company, you’re constantly listening, assessing, improving, trying to figure out how to happily surprise your subscribers each and every day.’

Be flexible like the Dollar Shave Club

When it launched back in 2011, the Dollar Shave Club was a revolutionary idea in men’s cosmetics and was received with great acclaim. With the simple business model of delivering high quality shaving products to men, on a monthly basis and at a fair price, it was estimated that the Club had secured an impressive 3.2 million subscribers by 2016.

For eConsultancy, one of the biggest selling points of the Dollar Shave Club subscription is its flexibility. Pointing out that ‘consumers might be reluctant about signing up to a subscription box service because of concerns over difficult cancellations in future,’ eConsultancy argues that fostering trust in the flexibility and simplicity of the subscription is important if your brand is looking to scale up its consumer base.

This is exactly the approach taken by the Club, which through its ‘personal, easy-going and humorous tone of voice’ reassures customers that they can choose a plan right for them and opt out at any time. Offering starter kits priced at only $5, the simplicity and self-assurance inherent in the brand’s message is perhaps its biggest selling point.

Whatever product or service you’re offering and no matter who your target consumer, looking to successful subscription models employed by brands can provide a wealth of insights into how this can be adapted to meet your needs. Rather than shying away from alternative models like subscription, marketers should be looking to see how they can cater to the needs of consumers crying out for personalisation, flexibility and experience.